【RIEM Weekly Seminar NO.345 】The Value of Institutional Brokerage

2018-10-09 341views

Title:The Value of Institutional Brokerage

Relationships:Evidence From the Collapse of Lehman Brothers

Speaker:Jianfeng Shen (沈建峰)

Time:1:55pm April 20, 2018 Venue: H501

Abstract

Using the sudden collapse of Lehman Brothers as a natural experiment, we examine whether mutual funds derive value from their institutional brokerage relationships. We find the impact of a damaged institutional brokerage relationship is greatest among mutual fund clients with concentrated brokerage networks and funds that specialize in small-cap stocks. Based on a difference-in-difference analysis, we find a drop in monthly fund alphas ranging from 34.2 and 70.9 basis points per month in risk-adjusted returns arising from a weakening brokerage relationship. Collectively, our results support the view that mutual funds significantly leverage their relationship capital with brokers.

Speaker's Information

Jianfeng is a Senior Lecturer of Finance at the University of New South Wales (UNSW). His research focuses on information, investor behaviors, and asset prices. His articles have appeared in the Review of Financial Studies, Journal of Corporate Finance, and Journal of Banking and Finance, among others. He earned his doctoral degree in Finance from NUS Business School, National University of Singapore and bachelor degree in Economics from School of Economics, Zhejiang University.